IHSG Opens Higher on Positive Market Response to Indonesia's Emerging Market Status Retention
The Indonesian Stock Exchange (IDX) Composite Index (IHSG) opened higher on Wednesday, gaining 26.94 points, or 0.44 percent, to 6,128.27, as market players responded positively to MSCI’s decision to maintain Indonesia’s capital market classification as an Emerging Market. The LQ45 index of top 45 stocks also rose 2.70 points, or 0.45 percent, to 601.13.
Associate Director of Pilarmas Investindo Sekuritas, Maximilianus Nico, stated in his research that despite the positive technical outlook, the IHSG still faces potential weakness with support and resistance levels at 6,050 and 6,220 respectively.
Global index provider MSCI acknowledged Indonesia’s capital market reform agenda and decided to retain its Emerging Market status. However, MSCI will continue to assess the coverage, consistency, and sustainable effectiveness of Indonesia’s capital market, particularly regarding free float determination and broader investability assessments. MSCI warned that if sufficient progress is not observed by the November 2026 MSCI Index Review, it will consider various options for the appropriate treatment of the Indonesian market, potentially including a consultation on reclassification from Emerging Market to Frontier Markets status.
Responding to the MSCI announcement, Nico noted that despite all efforts made by the Indonesian capital market, trust remains the main barrier for foreign investors to re-enter the market. He emphasised that market participants and investors are concerned not only with reforms by stakeholders but also with current government policies and political stability. “It feels like Indonesia has never experienced pressure like this coming from all directions,” Nico remarked.
Nico also assessed that the legal protection policy for Patriot Bond and Merah Putih Bond investors could potentially attract funds currently held outside the financial system back into the domestic economy. If successful, domestic liquidity would increase and the government would gain additional financing sources for development. “However, this policy also risks creating a perception of a disguised tax amnesty, so its implementation and supervision must be maintained to avoid reducing trust in the taxation system and law enforcement,” he added. Separately, Deputy Minister of Finance Purbaya Yudhi Sadewa confirmed that the legal protection for Patriot Bond and Merah Putih Bond investors is intended to draw funds from outside the financial system into the domestic economy, clarifying that the protection applies only to funds placed in these specific instruments and does not grant blanket legal immunity to investors.
On Tuesday’s trading, European markets closed uniformly lower, with the Euro Stoxx 50 down 1.25 percent, the UK’s FTSE 100 down 0.09 percent, Germany’s DAX down 0.98 percent, and France’s CAC 40 down 0.71 percent. US markets on Wall Street also fell, with the Dow Jones Industrial Average slipping 0.09 percent, the S&P 500 dropping 1.44 percent, and the Nasdaq Composite declining 3.29 percent. In regional Asian markets this morning, the Nikkei index fell 0.40 percent to 69,507.00, the Shanghai index weakened 0.21 percent to 4,097.84, while the Hang Seng index rose 0.10 percent to 23,358.50 and the Strait Times index gained 0.17 percent to 5,215.43.